At an IMF meeting over the weekend, the finance minister of Brazil, Guido Mantega, blamed the US and other developed nations for precisely the same thing the US is always harassing China: keeping currency values low in an effort to export their way out of economic difficulties, according to the New York Times.
Mantega focused on commodity inflation — notably food and oil — as the main culprits, saying the price rises there were making it hard for the still-poor vast majority of people in emerging nations like Brazil — as well as the other BRICs / Turkey / South Africa etc — to survive.
On the one hand, he’s completely right that poor people in developing nations are having a hard time — but so are poor people in the US and EU, as well as a growing number of people who were formerly considered middle-class.
THAT problem in BOTH the developed and emerging worlds, however, is fundamentally the same: growing income inequality that is holding back economic growth all over the world.
So if Mantega wants to more accurately cast aspersions at the US / EU et al, then he’d be better off talking about the ever-rising gap between rich and poor.
Especially since, on the other hand, the biggest source of rising commodity prices for food and oil is demand from precisely the growing numbers of middle-class people in the emerging world — AND it’s usually OTHER emerging markets that are providing those ever-higher-priced commodities !!!
Like we said, he’s both right and wrong at the same time — since emerging market nations are both the cause AND victim of rising commodity inflation.
And the only REAL way out for both developed and emerging nations is NOT currency devaluation, but rather, REDUCING THE OBSCENELY GROWING GAP BETWEEN RICH AND POOR.